Connext Overview

What is Connext?

Connext is a scaling solution for the Ethereum network, leveraging state channel hubs to power fast and cheap ETH and ERC20 token transactions. Using Connext, developers can enable scalable micropayments in their wallets, applications and protocols.

Which problems does Connext solve?

We believe that there is a huge world need for digital peer-to-peer micropayments. However, existing payment infrastructure is built around institutions rather than individuals, where institutions have to shoulder the cost burden of preventing fraud. Because of this, the cost of making payments is too high and requires too much coordination, making micropayments below a certain price threshold unfeasible.

We also believe that blockchains offer a solution to some these problems. By minimizing trust in peer-to-peer interactions, blockchains dramatically lower the cost of system-wide regulation (and truly trustless systems may remove the need for regulation altogether). Despite these benefits, blockchains struggle to meet the performance requirements of a micropayment-based economy without either sacrificing security or decentralization.

In other words, p2p micropayments become possible when you can preserve the underlying benefits of a blockchain while also leveraging the speed of being off-chain (on "layer two"). Connext is a layer two network which offers solutions to the following issues:

Traditional payment processors like Visa are capable of processing over 50,000 transactions per second (TPS); the Ethereum blockchain averages around 10 TPS.
With Connext Hubs, there is no theoretical limit to transaction volume or speed; rather, our technology scales with its user volume, and server capacity will dictate maximum throughput.

Long transaction confirmation times (15-30 seconds) hinder UX.
Transactions via a Connext Hub offer instant finality while preserving the security of the base blockchain. Much like settling a tab at a bar, confirmation times are only incurred when a user closes their "channel" with the Connext Hub.

High transaction (gas) costs limit the ability to do micropayments.
Because individual transactions using a Connext Hub occur off-chain, users do not incur transaction fees until they close their "channel" and settle their final balance with the blockchain.